18/09/2014 World Business Report

Rob Ford dropped out of the race for re`election as mayor of the Canadian

city after he was admitted to hospital with abdominal pain. Those

are the latest headlines from BBC News.

Now for the latest financial news with Sally Bundock and World

Business Report. It is Alibaba fever, as the Chinese

internet giant gears up for the biggest ever stock market flotation.

Plus, a new record close for the Dow and the dollar surges, as the Fed

reassures on interest rates. Welcome to World Business Report.

I'm Sally Bundock. Also in the programme: The two Asian

economic giants, China and India, talk business.

We start with what could be the biggest stock market flotation of

all time. Chinese internet company Alibaba is expected to complete its

sale of shares to big investors this Thursday before trading opens to the

general public on the New York Stock Exchange on Friday. Alibaba's

original and main business is a website that connects Chinese

exporters with the rest of the world. Buyers type in what they are

looking for and they are then linked up with manufacturers in China. The

empire also includes Chinese equivalents of eBay, Twitter,

YouTube and PayPal. Let's take a look at the numbers involved,

because they are huge. Alibaba now accounts for around 80% of all

online retail sales in China. It sold items worth almost $300 billion

in the year to the end of June, far more than eBay and Amazon combined.

It is expected to have a stock market value of $170 billion once it

starts trading on Friday. In the internet world, only Google and

Facebook are worth more than that. From New York, Michelle Fleury

reports on the Alibaba fever that is gripping Wall Street. The Big Apple,

America's financial centre. New Yorkers have a reputation as a tough

crowd to please, especially when it comes to investments. That is what

the massive Chinese company Alibaba will soon discover when its shares

begin trading at the New York Stock Exchange.

This will be one of the biggest events I have witnessed.

Inside this emblem of capitalism, Alibaba is about to have what could

be the biggest stock offering on the planet. Bigger than Facebook and

bigger than the Agricultural Bank of China. Such is the anticipation, one

broker has had requests for shares via Chinese social media.

I'm very active on Chinese social media.

I have had people chatting with me and asking me if I can connect them

with the IPO team because they want to buy up to two million shares. Why

all the hype? Internet analyst Max Wolff explained.

This company is literally poised to take advantage of the largest

emerging middle class in the world, China, and the largest consumer

class emergence in the history of the world, China.

Alibaba's success as an online marketplace has already made it a

force on the Chinese internet and it has helped turn its founder, Jack

Ma, from a teacher into one of China's richest men. Investors are

being asked to put their trust in Mr Ma, but should they? After all, this

Chinese company comes with unusual risks including a unique ownership

structure, which gives the owner most of the control, and an opaque

political system that, for now, has supported the company's success.

There is no shortage of investors clamouring to place a bet on Alibaba

and all eyes will be on that float on Friday.

Staying on Wall Street, it could be an auspicious time for Alibaba to

float. That is because US stocks closed at yet another record on

Wednesday after reassuring comments from the Federal Reserve. The Dow

Jones Industrial Average rose 24 points to close at this, 17,156.85,

which beats its previous record set in June. It is the 16th new record

high this year. The Fed said it would finish winding down its

stimulus measures by next month. But traders were encouraged by promises

from the US Central Bank that interest rates will stay close to

zero for a considerable time after that. Ben Thompson reports from

Washington. Here, the focus was on the language

being used to describe a potential increase in interest rates. The

Federal Reserve said it would not raise interest rates for a

considerable time after the end of its stimulus programme. Attention

has now shifted to when that might be. Janet Yellen has insisted that

forward guidance, that idea of considerable time, should not be

linked to a specific date. I want to emphasise there is no mechanical

interpretation of what the term considerable time being. As I have

said repeatedly, the decisions the committee makes about what is the

appropriate time to begin to raise its target for the federal funds

rate will the data dependent. The Federal Reserve says it needs the

ability to adapt to a changing economy. Unemployment is falling and

inflation is coming back in line but it needs the flexibility to adapt to

changing economic conditions. Raising rates to quickly could choke

off an economic recovery. Keep them too low for too long could see the

recovery spiral out of control. America has been awash with cheap

cash and low interest rates because of the economic stimulus but those

emergency measures cannot last indefinitely. Ali Moore is in

Singapore for us today. It was what the markets wanted to hear in Asia

as well? It was but not as definitively as on Wall Street. The

dollar climbed to its highest point in 14 months against a basket of

currencies. A six`year peak against the Japanese yen and currently

holding that level. Tokyo stocks have climbed as a result. Around

Asia, there has been a more mixed reaction on the markets. For the

dollar, it is interesting because the Federal Reserve did maintain its

language on rate increase is not happening for a considerable time.

Certainly, there is no dates. Like most central banks, it is like

reading tea leaves. But whatever the timing, US rates seem to be heading

higher. Other markets like the eurozone and Japan continue to be

firmly committed to easy monetary policy for some time to come. Thank

you. Chinese President Xi Jinping arrived in India on Wednesday. The

symbolic three`day trip is seen a chance for India to push for

improved economic ties with China. Two`way trade between the Asian

giants is already worth tens of billions but the relationship is

complicated by politics. So, are the two leaders likely to sign any

economic deals and what does this visit mean for relations? Thank you

for joining us. Both sides want a great deal out of these three days.

How is it going? The first day had a lot of action because Xi Jinping

arrived in Gujarat, not Delhi. This is the same state that Narendra Modi

was in charge of for a number of years before the became Prime

Minister. The Chinese know him quite well. China is very interested in

the state as well. The amount of trade between these two countries is

huge and even on this trip, they are expected to sign deals worth

billions of dollars. But behind these numbers, the first thing we

can take away is that China can offer investments in manufacturing

and infrastructure. India wants to build a huge manufacturing base and

China can do that by pumping in billions of dollars. The second

thing is that there is a huge trade balance between the countries,

running up to $30 billion. He says `` Narendra Modi says they could

open the countries in some ways. That will be the key takeaway from

this trip and we expect more deals to be signed in the next few days.

What is on the agenda or tomorrow? Between today and tomorrow, we could

have more deals signed, especially when it comes to infrastructure and

many factoring. Railways, bullet trains, industrial parks are

infrastructure projects, electronics, where Chinese companies

could create and invest in these huge industrial parks where Indian

companies could set up and develop electronics. Thank you. That is all

from World Business Report. See you soon.

They have been a familiar sight on Britain's cars and vans for over 90

years but soon, they will disappear forever.